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Suppose, for simplicity, that three main parts of a laptop are CPU, RAM, and hard drive;so if one of theses components fails, the laptop fails. Assume that the life times of CPU, RAM, andhard drive are exponentially distributed with mean 3 years, 2 years, and 5 years, respectively. If thecompany that sells these laptops guarantees the replacement of any laptops that fail in the first year, anda replacement costs $500, what would be the average yearly replacement cost

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ogorwyne

If the company that sells these laptops guarantees the replacement of any laptops that fail in the first year, and a replacement costs $500, what would be the average yearly replacement cost? Assume that on average the company sells 100,000 laptops a year.

Answer:

$32.2 million

Explanation:

1-e^xo/u

U = mean

P(c) = 0.2834

P(r) = 0.3934

P(h) = 0.1813

P = 0.8581-0.2342+0.0202 = 0.6442

Replacement = 500x100,000x0.6442

= 32.2million dollars

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